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CABRI sector dialogue on value for money in agriculture spending
Tanzania case studyAgricultural Sector Development Programme:
Are we spending on identified priorities?
CABRI sector dialogue on value for money in agriculture spending
Tanzania case studyAgricultural Sector Development Programme: Are we spending on
identified priorities?2014
CABRI sector dialogue on value for money in agriculture spending – Tanzania case study III
Contents
List of tables and figures IV
Acronyms and abbreviations V
Acknowledgements VI
1. Introduction 11.1 Problem statement 2
1.2 Objectives 2
2. Agricultural sector overview 3
3. Agricultural budget planning process 6
4. Agricultural spending efficiency 7
5. Conclusion 10
References 11
Agricultural Sector Development Programme: Are we spending on identified priorities?IV
List of tables and figures
Table 1: Agricultural investment priority areas
Figure 1: Annual sectoral aggregate growth
Figure 2: Agricultural subsector annual growth rates
Figure 3: Agricultural sector financing in Tanzania
Figure 4: Trends in food security
Figure 5: Spending on agricultural investments, 2006 – 2013
Figure 6: Specific expenditures to commodities, 2006 – 2013
CABRI sector dialogue on value for money in agriculture spending – Tanzania case study V
Acronyms and abbreviations
ASDP Agricultural Sector Development Programme
ASDS Agricultural Sector Development Strategy
ASLM agricultural sector lead ministries
CABRI Collaborative Africa Budget Reform Initiative
CSO civil society organisation
DADP district agricultural development plan
DAP district agriculture plan
ESRF Economic and Social Research Foundation
GDP gross domestic product
LGA local government authority
MoF Ministry of Finance
NAIVS National Agricultural Inputs Voucher Scheme
NGO non-governmental organisation
O&OD opportunities and obstacles for development
Agricultural Sector Development Programme: Are we spending on identified priorities?VI
Acknowledgements
This case study report was prepared for the CABRI Sector
Dialogue on Planning, Budgeting and Innovative Financing
for Agriculture. The CABRI Secretariat would like to thank
Dr Donatilla Kaino (first author), Dr Ibrahima Hathie (team
leader), Dr Alle Nar Diop and Dr Soumaila Bitbale for
providing their inputs for the case study report.
CABRI sector dialogue on value for money in agriculture spending – Tanzania case study VII
Agricultural Sector Development Programme: Are we spending on identified priorities?1
1. Introduction
The Agricultural Sector Development Programme (ASDP)
is Tanzania’s main programme to oversee the sector’s
development and transformation. The ASDP has two
objectives: to improve farmers’ access to and use of
agricultural knowledge, technologies, marketing systems and
infrastructure, all of which contribute to higher productivity,
profitability and farm incomes; and to promote private
investment on the basis of an improved regulatory and
policy environment. The priority areas for investment in the
agricultural sector are presented in Table 1.
Currently, the government is in the process of
formulating ASDP II. This is a critical opportunity to review
past performance and to assess whether funds were spent
in accordance with the identified priorities. The government
has been using fiscal policy for the development and
transformation of the agricultural sector. The challenge of the
fiscal policy is in the efficiency of agricultural sector planning,
budgeting and execution in order to unleash the underutilised
potential of the sector. This becomes even more challenging
because implementation of the programmes is no longer
centralised. Under the ASDP, districts have autonomy to
plan for their agricultural development and expenditures,
and are accountable to the central government and
surrounding community.
This study combines interviews and literature reviews
to present a perspective on agricultural budgeting issues in
Tanzania. Studies on agriculture financing and expenditures
were widely consulted in the process to obtain evidence
on planning, budgeting and spending for agricultural
development. The Agricultural Sector Development
Strategy (ASDS) and ASDP were the principal documents
for the study. The review also includes documents relating
to policies in agriculture, co-operatives, irrigation, land
and long-term development plans. A detailed analysis of
expenditures at district level was carried out by reviewing
previous studies conducted by NGOs. This was done with
the purpose of gathering evidence on budget planning and
implementation at local government authority (LGA) and
district level.
This case study was prepared for the Agriculture Sector
Investment priority area Benefits
Infrastructure (feeder roads, markets, electrification, storage facilities, etc.) and agro-processing
Improved distribution of inputs and lower costs of inputsImproved transport of agricultural products and lower marketing costsAttraction of private investment in agro-processing and other non-farm activitiesIncreased market outlets for agricultural products, increased producer prices, increased farmers’ income
Irrigation Increased production of agricultural products, more specifically maize and riceIncreased and stable income for farmers
Mechanisation Increased labour productivity and income for farmersFarmers’ labour available for other non-farm income-generating activities
Research and development Increased labour and land productivityIncreased farmers’ income
Farm inputs Increased labour and land productivityIncreased farmers’ income
Renewable natural resources Improved adaptation to climate changeImproved environmental management, including soil fertility
Source: ESRF (2010)
Table 1: Agricultural investment priority areas
CABRI sector dialogue on value for money in agriculture spending – Tanzania case study 2
1
Dialogue series of the Collaborative Africa Budget Reform
Initiative (CABRI). The purpose of these dialogues is to
create a platform for peer learning in agricultural budgeting
and financing.
1.1 Problem statementAgricultural sector development and transformation in
Tanzania has been the central objective of economic
development since independence. The sector is the
backbone of the economy and, as such, is the prime
sector for structural economic changes. The majority of
Tanzanians live in rural areas, and agriculture is the main
economic activity. Since independence, each president has
created a grand programme and slogans for modernising
the agricultural sector. These programmes include
Kilimo Kwanza, meaning ‘Agriculture First’, the Tanzania
Agriculture and Food Security Investment Plan (TAFSIP)
under the Comprehensive Africa Agriculture Development
Programme (CAADP) and, most recently, the Southern
Agricultural Growth Corridor of Tanzania (SAGCOT), which
has been established to mobilise private and government
investments in the agricultural sector through public-private
partnerships and the Monitoring and Delivery Mechanism
under the Presidential Delivery Bureau.
Despite these efforts, the agricultural sector is still
growing at only 4 per cent, below the 6 per cent that
was projected as being sufficient to raise rural household
incomes and facilitate their mobility out of poverty. The
majority of farmers continue to use hand hoes and few
improved inputs. Rainfall is the major source of water for
farming, exposing farmers and sector performance to the
vagaries of weather and climate change. The current status
raises important basic questions as to whether spending is
actually in line with key priorities, and whether spending
achieves value for money.
1.2 ObjectivesBy focussing on Tanzania’s ASDP, which has been operational
since 2005, this case study allows budget and policy officials
to explore the following questions:
� Does expenditure align with identified priorities?
� Is the ASDP budgetary process efficient and effective?
� Does spending result in better agricultural outcomes
(value for money)?
� How can the government of Tanzania ensure that
spending is effective and efficient?
� What tools and analysis are needed?
The case study also incorporates specific ‘discussion
questions’ in text boxes. The questions are in line with the
broader questions specified above and assist in facilitating
group discussions systematically at the CABRI Agriculture
Sector Dialogue.
Agricultural Sector Development Programme: Are we spending on identified priorities?3
About 75 per cent of the Tanzanian population is employed
in the agricultural sector, which is dominated by small-scale
subsistence farmers operating on an average of 0.2 – 2
hectares per famer, as well as traditional agro-pastoralists
and fishers. Nearly 80 per cent (35 million hectares) of the
arable land is used by smallholders, with only about 1.5
million hectares for medium- and large-scale farming. Only
1.5 per cent of the suitable irrigation land (29.4 million
hectares) is used for irrigation farming and 86 per cent of it
is owned by smallholders, while the rest belongs to large-
scale farmers. Agriculture in Tanzania is heavily reliant on
rainfall (NBS 2012; MAFC 2011).
The main food crops produced are maize, beans,
groundnuts, cassava, rice, sorghum and sweet potatoes,
while the main cash crops are tobacco, coffee, cotton,
2. Agricultural sector overview
cashew nuts, tea, sugarcane and sisal. Cashew nuts, rice,
tobacco and cotton are produced mainly by smallholders.
Large- and medium-scale agricultural production is
concentrated on cash crops such as coffee, sugar, tea
and sisal. Keeping livestock is also an important economic
activity and source of food. Despite Tanzania having more
than 18 million head of livestock, the contribution of this
subsector to GDP is only 4.6 per cent. It is important
to note that agricultural sector growth in the last decade
was modest, at 4 per cent, which is low compared to
the industrial and services sectors (see Figure 1). Within
agriculture, the crops subsector contributes more than
livestock, diary and fisheries. Agriculture remains the single
largest sector contributor to GDP, despite high growth
rates in the services and industrial sectors.
Figure 1: Annual sectoral aggregate growth
Source: MoF (2012)
0
2
4
6
8
10
12
2004 2005 2006 2007 2008 2009 2010 2011 2012
Agriculture Industry Service
Annu
al G
row
th R
ates
(%)
CABRI sector dialogue on value for money in agriculture spending – Tanzania case study 4
Figure 2 shows that the average annual growth rate of the
agricultural sector for the period 2006 – 2012 (aggregate),
despite fluctuation, was around 4 per cent, which is far
below the ASDP target of 6 per cent. In fact, prior to the
commencement of the ASDP in 2004, the agricultural
growth rate was 5.9 per cent higher than the current level.
Figure 2: Agricultural subsector annual growth rates
Source: MoF (2012)
Figure 3 shows budgetary allocations and actual expenditure
in the agricultural sector for the financial years 2006/07
– 2012/13. Except for 2010/11, the budgeted amounts
exceed the Maputo Declaration on Agriculture and Food
Security target. However, Tanzania met the Maputo target
in terms of actual expenditures only for 2006/07 – 2008/09.
2
2004 2005 2006 2007 2008 2009 2010 2011 20120
1
2
3
4
5
6
7
Annu
al gr
owth
rate
s (%
)
Agriculture (aggregate) CropsLivestock Hunting and forestry
0.0
5.0
10.0
15.0
20.0
20.0
%
2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13
Support to agriculture - budget allocations (% of total)Support to agriculture - actual spending (% of total)Maputo declaration target
Figure 3: Agricultural sector financing in Tanzania
Source: MoF (2006/07–2012/13)
Agricultural Sector Development Programme: Are we spending on identified priorities?5
Discussion question
Do the data convincingly tell us that the ASDP has
been successful? Why or why not? How would you
determine the success of the programme?
Arguably, the ASDP has contributed towards stabilising
food security in the country, as evidenced by an increase
in production area and volume over time, facilitated by the
National Agricultural Inputs Voucher Scheme (NAIVS).
Figure 4 indicates progressive improvement in the supply
of food, as measured by kcal/capita/day and dietary
adequacy in percentages. However, because of the
decreases in supply of food that occurred between 2007
and 2011 as a result of the global food price crisis, dietary
adequacy was met by imports from Asia and elsewhere.
The government provided tax waivers to larger importers
to satisfy local demand.
Figure 4: Trends in food security
Source: FAOSTAT
2003 2004 2005 2006 2007 2008 2009 2010 2011 201294
96
98
100
102
104
106
%
1 900
1 950
2 000
2 050
2 100
2 150
2 200
2 250
kcal/
capi
ta/d
ay
Food supply (kcal/capita/day) Average dietary adequacy (%)
2
CABRI sector dialogue on value for money in agriculture spending – Tanzania case study 6
Normally, Agricultural Sector Lead Ministries (ASLMs) spend
about 25 per cent of the ASDP implementation budget,
while the largest share of ASDP funds (about 75 per cent)
is spent at the LGA level through district agricultural plans
(DAPs) (Policy Forum 2012). ASLMs’ expenditures are
concerned with agricultural inputs, which include fertiliser
and pesticide subsidies, large irrigation scheme development,
regulation and co-ordination, as well as quality assurance.
Thus, district councils use funds to prepare and implement
district agricultural development plans (DADPs). Financing at
the local level complies with a fiscal decentralisation policy in
terms of which activities are financed on the basis of a block
grant financing system.
Of the funds received at the LGA level, at least 80 – 85
per cent is expected to support community projects through
the District Agricultural Development Grant, the Agricultural
Capacity Building Grant and the Agricultural Extension Block
Grant. Traditionally, interventions through the development
grants, which should be used only for investment, receive
over 65 per cent of the total, while the remaining 35
per cent is shared between capacity-building grants and
extension grants.
The ASDP works through a sector-wide approach,
involving the Ministry of Agriculture, Food Security and
Co-operatives, the Ministry of Industry and Trade, the
Ministry of Livestock Development and Fisheries, and
the Prime Minister’s Office, Regional Administration and
Local Government. The ASDP is implemented largely
by LGAs through DADPs as an integral part of the district
development plans. The decentralisation process has
transferred more power and autonomy to LGAs to plan for
resource mobilisation and expenditures for the sector.
At village level, agricultural plans are developed using
O&OD (opportunities and obstacles for development)
through a joint meeting of village members and a ward
facilitation team. O&OD helps villagers and the facilitation
team to come up with key priority areas for intervention
within the three years of the medium-term expenditure
framework. Stakeholders are involved in different ways from
one LGA to another at district, ward and village level. There
are some indications that civil society organisations (CSOs),
including producers’ organisations, take part in planning
but not at full-scale. On a regular basis, CSOs are specially
invited to a consultative meeting at district level during the
compilation stage (EAFF 2011).
Development plans from villages and wards are tabled at
district level before being submitted to the regional level. In
all of these processes, priority areas and working plans are
refined and, at regional level, budgets are harmonised. This
is done to make sure that the regional government does not
exceed the limit specified by the Ministry of Finance (MoF).
It is at this stage that most of the plans/activities emanating
from the village are either dropped or scaled down. Here,
the focus on the limit raises the risk of a village plan being
distorted by regional officers. A bottom-up approach can be
watered down technically and subtly by the MoF’s regional
budget limit.
4. Agricultural spending efficiency3. Agricultural budget planning process
Discussion question
How can the budget process be improved to
incorporate budget ceilings from the top while ensuring
that priorities from the bottom are retained?
Agricultural Sector Development Programme: Are we spending on identified priorities?7
Figure 5 shows that since 2006, the government’s priority
has been input subsidies. Budget allocation for inputs has
been sustained for more than five years, although yields
4. Agricultural spending efficiency
have not increased substantially and the prospect of farmers,
who continue to buy the inputs after the programme has
been phased out, is uncertain.
Training14%
Agricultural research16%
Payments to processors1%
Other1%
Input subsidies43%
Non-classified6%
Storage/public stockholding4%
Infrastructure(roads, non-farm irrigation infrastructure, other)1%
Inspection(veterinary/plant)1%
Extension/technologytransfer10%
Marketing3%
Figure 5: Spending on agricultural investments, 2006 – 2013
Source: MoF (2006/07–2012/13)
CABRI sector dialogue on value for money in agriculture spending – Tanzania case study 8
4
The recent expenditure review of the NAIVS indicates that
43 per cent of the beneficiaries would continue to buy inputs
when the programme ends. However, farmers complained
about delays in the delivery of inputs, which often arrive at
the end of the season (World Bank 2014).
Discussion question
Should the government continue to prioritise input
subsidies over other activities, including irrigation
and processing?
Figure 6 provides a breakdown of the input subsidies.
As expected, rice and maize have a large share of the
expenditure due to their importance in food and income
generation to more than 6 million producers in the
country. However, the national average yield of rice and
maize is still below 2 ton/ha compared to countries in
East Asia at 18 ton/ha. In addition, despite the country’s
18 million head of livestock, the budget share to livestock
development is only 9 per cent.
Livestock9%
Forestry and apiculture7%
Dairy1%
Cotton and coffee0%
Horticulture0%
Fish27%
Maize and rice26%
Mixed crops30%
Figure 6: Specific expenditures to commodities, 2006 – 2013
Source: MoF (2006/07–2012/13)
The major problems farmers face are access to markets (and
proper marketing structures for concluding transactions)
and limited investment in irrigation farming. However,
spending in support of this critical infrastructure is very low.
In 2005, the government implemented the Agricultural
Sector Marketing Development Programme prior to an
improvement in production. The input subsidy programme
Discussion question
Should the government continue to prioritise staple
crops over other farming enterprises e.g.cash crops,
livestock etc? What are the pros and cons?
Agricultural Sector Development Programme: Are we spending on identified priorities?9
4
was launched in 2008. This is why in the past five years’
inputs have received a substantial share of the budget.
However, the sequencing of the programmes was not
strategic and discloses a capacity gap in the prioritising of a
strategic project.
Production of rice and maize has increased as a result
of continuous government support for the input subsidy
programme. As production increases, however, farmers
face huge post-harvest losses due to lack of adequate
storage facilities. Private facilities are expensive and
unaffordable to many farmers. They are forced to sell
surplus at relatively low prices and, in some years (such
as 2008 – 2012), they are confronted with an export ban,
which is a policy measure counter to input subsidies. In the
long-run, value for money in this intervention is reduced
because of the post-harvest losses incurred by farmers.
Furthermore, budget transfers to support processing
in Tanzania are still very low. The government’s rhetoric
focusses on value addition and crop diversification as part
of efforts to transform the sector. Indeed, each district has
been advised to promote one commercial crop for value
addition. From 2006 to 2013, however, the government
budget allocation to processors to encourage value
addition was a mere 1 per cent.
CABRI sector dialogue on value for money in agriculture spending – Tanzania case study 10
5. Conclusion
The agricultural inputs subsidy programme may have
contributed to an overall increase in food crop production,
but productivity of the targeted crops (maize and rice)
is still very low compared to most East African countries.
Several challenges face the ASDP, beyond fiscal issues,
which have influenced poor performance and outcomes.
This is particularly so with regard to ASDP sub-component
programmes, such as capacity development of LGAs,
agricultural input subsidies through the NAIVS, irrigation
developments, infrastructure, markets and ad hoc trade
policy measures from central government. The challenges
may be summarised as follows:
� political interference, for example, NAIVS was
politically expanded to cover drier regions where
returns were much lower (the original plan was to
focus on high-yield regions, in order to produce a
surplus for the country);
� beneficiaries of NAIVS consider the subsidy to be an
income transfer to reduce production costs, instead
of an inducement to encourage the testing and
adoption of new technology;
� many farmers have received input vouchers out of
season;
� some of the input vouchers have been fraudulently
redeemed and dumped on the market;
� the world food price crisis in 2008, followed by an
export ban, affected many producers who were
relying on export markets;
� a shortage of qualified irrigation engineers hindered
the construction of irrigation schemes;
� limited technical skills at LGAs in planning through
O&OD (most have created ‘wish lists’ instead of
strategically focussed planning in project development);
� unpredictable flows of donor funds to ASDP projects;
� over-reliance on rain-fed agriculture and low levels of
technology adoption; and
� limited involvement of the private sector in
agriculture, and an absence of private sector services
in rural areas.
Discussion question
Do other countries also experience these technical
inefficiencies? What is being done to overcome them?
Moreover, the focus is largely on inputs, with little
consideration of post-harvest management, value addition,
improvement of rural infrastructure, and irrigation
development and processing. With regard to budgeting and
planning, each LGA has its own priority based on O&OD
plans. This method of planning leads to disarray of sequential
and strategic development because most interventions are of
short duration and aimed at achieving immediate results. It is
important to explore the question of sectoral co-ordination
in addition to the broader questions raised above.
Agricultural Sector Development Programme: Are we spending on identified priorities?11
References
EAFF (Eastern Africa Farmers’ Federation) (2011) Study on
budgetary allocation and absorption in agriculture sector
ministries in Tanzania. Nairobi: EAFF.
ESRF (Economic and Social Research Foundation) (2010)
Agriculture Sector review and public expenditures review
2010/2011. Report submitted to the Ministry of Agriculture,
Food Security and Co-operatives of the United Republic of
Tanzania, November. Dar es Salaam: ESRF.
MAFC (Ministry of Agriculture, Food Security and Co-
operatives) (2011) Tanzania Agriculture and Food Security
Investment Plan (2011/12 to 2020/21). Dar es Salaam:
MAFC.
MoF (Ministry of Finance) (2006/07–2012/13) Approved
budget books (Vol. I–IV) for the financial years 2004/5 to
2012/13. Dar es Salaam: MoF.
MoF (2012) Economic survey 2012. Dar es Salaam: Ministry
of Finance.
NBS (National Bureau of Statistics) (2012) National
Agricultural Crop Census 2007/2008. Dar es Salaam:
Ministry of Finance.
Policy Forum (2012) Agricultural sector budget allocations:
What is the fate of smallholder farmers in Tanzania? An
analysis of Tanzania’s Budget 2011/2012 in developing
District Agricultural Development Plans (DADPs). Policy
Brief 03/2011.
World Bank (2014) Public expenditure review: National Agricultural
Input Voucher Scheme. Available at: http://www-wds.
worldbank.org/external/default/WDSContentServer/WDSP/
IB/2014/05/01/000442464_20140501105135/Rendered/
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[accessed 3 November 2014].